Fact sheet: Standing Committee on Public Accounts—February 13, 2023
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Numbers are effective as of January 17, 2023.
National Shipbuilding Strategy
- Long-term strategy
- 6 large ships delivered:
- all 3 offshore fisheries science vessels (OFSV) to Canadian Coast Guard (CCG)
- 3 Arctic and Offshore Patrol Ships (AOPS) to Royal Canadian Navy (RCN) (Her Majesty’s Canadian Ship (HMCS) Harry DeWolf, delivered July 2020, HMCS Margaret Brooke, delivered July 2021, HMCS Max Bernays, delivered September 2022), next 3 under construction. Built by Irving Shipbuilding Inc. (ISI)
- the contract is currently being re-negotiated and the current budget of $4.3 billion is expected to increase; an exact figure will be available before the end of the calendar year
- Construction and delivery of small vessels is also underway:
- 7 hydrographic survey vessels
- 2 channel survey and sounding vessels
- 12 search and rescue lifeboats
- Third shipyard, once qualified, will build 6 program icebreakers and 1 Polar icebreaker for the CCG
- From 2012 to 2022, National Shipbuilding Strategy (NSS) contracts awarded totalled approximately $21.72 billion
- ISI—$6.74 billion
- Seaspan’s Vancouver Shipyards Co. Ltd. (VSY)—$5.31 billion
- Chantier Davie Canada Inc. (CDCI)—$2.28 billion
- Other shipyards/companies—$7.39 billion
- $1.07 billion to small businesses with less than 250 full-time employees
- NSS contracts between 2012 and June 30, 2022 contribute close to $21.26 billion ($1.93 billion annually) to gross domestic product, and create or maintain 18,239 jobs annually
Large ships and their status
- AOPS: 6 vessels (AOPS 1 to 6) for the RCN:
- first 3 AOPS delivered to RCN in July 2020, July 2021 and September 2022; next 3 AOPS under construction
- project budget: $4.98 billion and expected to rise
- AOPS: 2 vessels (AOPS 7 and 8) for the CCG:
- work underway to modify design to meet CCG requirements
- project budget: $1.6 billion (estimate)
- Canadian surface combatants: 15 vessels for the RCN
- currently in preliminary design review phase
- Lockheed Martin Canada won the design competition (Alion and Navantia also competed)
- Navantia matter before the courts, cannot comment
- project budget: $56 to $60 billion (estimate without taxes); not updated since the last Parliamentary Budget Officer (PBO) report
- new PBO report in October 2022 : Estimates of $84.5 billion without taxes, 9% increase from $77.3 billion, with taxes in February 2021 due to delays, escalation, inflation and COVID-19 costs
- Joint support ships (JSS): 2 vessels for the RCN:
- both JSS under construction
- project budget: $4.1 billion
- Multi-purpose vessels: Up to 16 vessels for the CCG:
- construction is expected to begin in the mid-2020s
- project budget: $14.2 billion (estimate)
- OFSV: 3 vessels for the CCG:
- all 3 vessels delivered to the CCG in 2019 to 2020, marking completion of first class of large ships built under NSS
- project budget: $788.5 million
- Offshore oceanographic science vessel: 1 vessel for the CCG:
- project budget: $966.5 million
- Polar icebreakers: 2 vessels for the CCG:
- engineering and construction of 2 Polar icebreakers announced in May 2021
- need delivery by 2030 when Canadian coast guard ship (CCGS) Louis S. St-Laurent to retire
- project budget: to be determined
- Program icebreakers: 6 vessels for the CCG:
- will be built by the third NSS shipyard
- project budget: to be determined
Third shipyard
- Government of Canada remains committed to delivering on the CCG’s fleet renewal plan, which includes selecting a third shipyard as a strategic partner under the NSS
- Selection of the third shipyard is a complex, multi-step qualification process and it is imperative that we get it right, therefore Public Services and Procurement Canada (PSPC) is making every effort to finalize this process, while ensuring best value for the Government of Canada
- Pending successful negotiations, an umbrella agreement is expected to be in place with the shipyard in early 2023
- The third shipyard will build 1 of 2 Polar icebreakers and 6 program icebreakers for the CCG
- Contracts for each project will be negotiated with the shipyard following the signature of an umbrella agreement:
- CDCI pre-qualified
- complex, multi-step qualification
- package to include 6 program icebreakers and 1 Polar icebreaker for the CCG, and 2 ferries for Transport Canada
- CDCI will continue work under programs such as the Halifax Class Docking Work Period Contract and other maintenance work of vessels such as the CCGS Louis S. St-Laurent (icebreaker), the interim Oiler Replenishment vessel (MV Asterix), and Transport Canada ferries, in parallel with the third yard selection process
Marine service contracts
- AOPS/JSS in-service support contract—awarded to Thales Canada, estimated at $5.2 billion for up to 35 years
- Halifax-class frigates maintenance—awarded to CDCI, ISI, and VSY up to $7.7 billion; work on first vessel (HMCS St. John’s) completed in November 2022
- competitive process underway to extend the contract for the maintenance and support of approximately 70 minor warship auxiliary vessels ranging from small boats to the maritime coastal defence vessels and associated equipment
Repair, refit and maintenance work
- Contract awarded for the vessel life extension of the CCGS Louis S. St-Laurent (icebreaker)
- The Victoria-class in-service support contract (VISSC), as awarded in 2008, was recently extended to allow for work on the RCN’s 4 submarines to continue up to 2027
- A competitive process for the follow-on sustainment solution to the VISSC, known as VISSC II, is currently underway. Upon the VISSC’s expiry in 2027, the VISSC II will provide support until the submarines are decommissioned
- Completed acquisition and conversion of 3 medium commercial icebreakers, CDCI
Procurement of Arctic-capable assets
- Under the NSS, Government of Canada is delivering a number of Arctic-capable vessels, including:
- 6 AOPS for the RCN; 2 AOPS for the CCG
- 2 Polar icebreakers and 6 program icebreakers for the CCG
- 2 JSS for the RCN
- The Nanisivik Naval Facility, currently under construction, will support the operations of the AOPS and other government maritime vessels
Auditor General audit on the surveillance of Arctic waters
- Auditor General report in November 2022:
- found that Government of Canada has not taken required action to addressed long-standing gaps affecting its presence and surveillance of Canadian’s Arctic waters (specifically mentions that icebreakers may reach the end of their useful lives before new ones are ready, and that further delays are expected in procuring AOPS)
- includes 1 recommendation for PSPC: that departments identify options and take action to acquire equipment in a timely manner, and develop and approve contingency plans to address the risk of having reduced surveillance capabilities in the event that key satellites, ships or aircraft cease to operate before they are replaced
- PSPC mandate is to provide procurement services, expertise, and support to federal partners
- NSS is a long-term strategy to renew Canada's federal fleet of combat and non-combat vessels, including ships that will work in the Arctic
- Through NSS, PSPC continues to work with CCG and RCN to procure safe, effective, and much-needed vessels to carry out their important work in Canada’s waterways
North Warning System operations and maintenance contract
- The North Warning System in Canada is a chain of 47 radar sites, supported by 5 logistics support sites that provide aerospace surveillance of Canada and North America
- Further to a competitive process, on January 31, 2022, Nasittuq Corporation, was awarded a $592 million contract effective April 1, 2022 until March 31, 2029 for the operation and maintenance of existing radar stations of the North Warning System
- Options also exist to extend the contract until March 31, 2037
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